How the Crippled Housing Market Affects Job Seekers
Would your mortgage prevent you from relocating for a job?
The technology industry offers tales of woe: jobs aplenty in hot spots like Silicon Valley, but candidates across the country who, anchored by houses that have dropped in value, can't move to fill them. And yet a new study tells a different story. According to a yet-to-be-published paper from Freddie Mac , owning an underwater property -- or owing more on a mortgage than the home is worth -- is not keeping job seekers from relocating for jobs.
Out-of-state moves, which are typically associated with employment opportunities, did not decline between 2007 and 2009, Freddie Mac reports, using data from the U.S. Census Bureau's American Community Survey. And Colleen Donovan, senior economist at Freddie Mac and author of the report, says she believes that trend has continued through 2011.
"If homeowners do have a job opportunity in another state or if they even perceive a better job opportunity awaits them in another state, they will go ahead and ... find a way to take that new job," Donovan says. That could mean walking away from a mortgage in default, finding the funds to pay it off, or renting out the home.
Still, some recruiters say it's difficult to find candidates to hire when so many are tied to properties that have fallen in value, what Donovan calls the "lock-in effect." The challenge is most apparent in talent-starved industries like technology, where companies that can't find qualified hires locally are looking across the region or even the country. Candidates being unable or unwilling to relocate exacerbates an already-problematic lack of engineers, says Todd Thibodeaux, CEO for CompTIA, the Computing Technology Industry Association. "Not all companies embrace mobile work and tele-work, especially small companies, who ... are last in line to get this skilled personnel."
Pam Sexton, a job seeker who lives in Olathe, Kan., a suburb of Kansas City, put her house on the market in early 2009 after losing her job, hoping to sell so she would be free to relocate for her next gig. But she found neither a job nor a buyer. Midway through that year, she decided to rent out the home instead. Yet geographical freedom still hasn't paid off in her job search; even with a decade of market-research experience on her resume, the 45-year-old has been unable to land a full-time job with benefits. Last week she accepted a full-time contract position with her former employer, Sprint, which is headquartered in Overland Park, near where she lives. "[Renting my home] didn't help me in any way, except it made me feel better that I wasn't going to lose my house," Sexton says.
More and more homeowners are becoming accidental landlords so they can move without selling their property at a loss, says Kimberly Smith, president of CorporateHousingbyOwner.com, which connects owners with tenants. "Even in the last six-plus months, it's an increasing trend," she says. "Mobility doesn't have to be buying and selling real estate anymore."
In a job market where openings are few and far between -- economists called last month's jobs report "depressing" -- many job seekers feel forced to make that choice, figuring a job across the country is better than no job at all, even if it means a sacrifice on the home front.
"When you are faced with this decision, if I get a job offer, no matter where it is and no matter what my housing situation currently is, I strongly have to consider taking this job," says Ken Shuman, spokesperson for Trulia , a real-estate information portal. "They're willing to move for the job but it doesn't mean that they're going to become a homeowner again... I think the bigger story would be how many of those people are actually thinking about buying again when they get to their new location."
The lock-in effect also plays into the remote-work trend. "As companies get desperate," Thibodeaux says, "they'll do more [to] allow people to work from wherever they are."
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